On the sprawling Lekki peninsula, where the $20 billion Dangote Petroleum Refinery rises like an industrial city, a quiet but monumental shift is underway. Deep beneath the murky shallows of the Niger Delta, some 22 kilometers from the Bonny terminal, crude oil is finally flowing from Dangote’s own wells.
Devakumar Edwin, Vice President of the Dangote Group’s oil and gas division, broke the news on April 17: after years of waiting, the company has achieved “first oil” from its upstream assets. The Kalaekule field on Oil Mining Lease (OML) 72 is now producing 4,500 barrels per day, a figure projected to reach 15,000 barrels per day within weeks, according to Olajumoke Ajayi, CEO of the upstream joint venture West African E&P (WAEP).
But the uncomfortable truth is that the refinery, with a staggering capacity of 650,000 barrels per day, could swallow that entire month’s worth of Kalaekule crude in a single morning. The gap between Dangote’s upstream ambition and the refinery’s insatiable appetite is not a crack, it is a canyon.
For all the talk of Nigeria’s oil wealth, the country exported 55.39 million barrels of crude in the first two months of 2026 alone, the Dangote Refinery has been forced to hunt for feedstock across three continents.
In 2025 alone, the refinery imported crude oil worth $3.74 billion, sourcing from the United States, Brazil, Angola, and Equatorial Guinea. In the first half of 2025, it imported about 60 million barrels of crude, averaging 9 to 10 million barrels monthly. As recently as February 2026, the refinery took delivery of approximately 250,000 metric tonnes of crude and intermediate feedstocks at its terminal, the largest cargo arriving from the Port of Ingleside in Texas.
The refinery’s CEO, David Bird, disclosed in February 2026 that the much-heralded Naira-for-Crude deal, a flagship government initiative launched by President Bola Tinubu to prioritize local supply currently accounts for only 30 to 35 percent of the refinery’s crude supply. In other words, nearly two-thirds of the crude that feeds Africa’s largest refinery still comes from abroad.
Between October 2025 and mid-March 2026, the refinery faced a crude shortfall of about 79.53 million barrels. Monthly deliveries from NNPC during this period amounted to just 4.55 million barrels in October, 6.45 million in November, 4.30 million in December, 5.65 million in January, 4.66 million in February, and only 3.6 million in the first half of March. The facility requires approximately 19.77 million barrels per month to operate at full capacity, meaning it received just 26.9 percent of what it needed.
The refinery has been receiving “about five cargoes a month from NNPC, far below the 13 cargoes required,” according to a refinery statement. In May 2026, NNPC allocated seven cargoes, an increase, but still not enough. A senior Dangote official admitted, “While this will not completely meet our demands, it can help”.
To make matters worse, when the refinery is forced to buy on the international spot market, it pays a heavy premium. Dangote recently had to pay premiums as high as $18 a barrel over the Brent crude benchmark to secure cargoes. Those costs, inevitably, ripple down to Nigerian consumers, who have seen petrol prices climb as high as N1,400 per litre.
Now imagine a different scenario. Picture the Dangote Refinery running at full throttle, its massive conversion units humming, fed entirely by Nigerian crude. What would that mean?
The government has already laid the legal foundation. The Domestic Crude Oil Supply Obligation (DCSO), enshrined in Section 109 of the Petroleum Industry Act (PIA) 2021, stipulates that oil producers must allocate a specified volume of their crude to the domestic market before exporting the remainder. In February 2025, the NUPRC went a step further, banning the export of crude oil allocated to domestic refineries, a decisive move to ensure that designated barrels actually stay in Nigeria. The government has also warned producers: supply local refineries or lose your permits.
If the DCSO were fully enforced, the benefits would cascade. First, the refinery’s feedstock costs would drop dramatically. Importing crude requires dollars, scarce foreign exchange that puts constant pressure on the naira. Domestic supply, transacted partly in naira under the existing framework, would ease that burden. In total, between October 2024 and October 2025, NNPC allocated 82 million barrels of crude to the refinery, of which 60 percent (49.3 million barrels) were supplied in naira. Expanding that to full domestic coverage would shield the refinery from global price volatility and dollar shortages.
Second, the refinery would operate at optimal capacity, producing enough refined products not only to meet Nigeria’s entire domestic demand but also to export surplus to West African markets, generating revenue in foreign currency rather than spending it.
The government’s commitment appears genuine. In October 2025, Minister of State for Petroleum Heineken Lokpobiri pledged to “prioritize feedstock security for all licensed refiners” and strengthen the DCSO “to ensure that every barrel produced in Nigeria contributes to both domestic demand and export commitments”.
Yet enforcement remains the Achilles’ heel. In July 2025, the NUPRC disclosed that oil producers had actively resisted supplying crude to Dangote and other local plants, submitting formal letters requesting waivers or explaining why they could not meet their DCSO obligations. The resistance came despite multiple engagements and the gazetting of regulations in September 2023. Producers preferred to sell to international buyers who pay in dollars, leaving domestic refiners priced out of their own crude.
The paradox is glaring: Nigeria exported 82 percent of its crude production in the first quarter of 2025, even as the Dangote Refinery struggled to find enough feedstock. For the first two months of 2026, overall production reached 81.94 million barrels, but only 26.55 million barrels remained for local refining, the rest was exported.
If the government were to fully enforce the DCSO and redirect a meaningful portion of those export barrels to Dangote, the refinery’s crude supply problem would be solved overnight. But doing so would mean confronting powerful international oil companies and renegotiating long-standing export contracts, a political and commercial minefield that successive administrations have been reluctant to cross.
If domestic supply obligations remain under-enforced, Dangote may have no choice but to secure its feedstock the hard way: by drilling it out of the ground itself. And the timing could not be better.
A seismic shift is underway in Nigeria’s upstream sector. International Oil Companies are exiting onshore and shallow-water assets at an unprecedented pace, driven by ESG commitments, a pivot to deepwater operations, and the challenging security environment in the Niger Delta. According to a Renaissance Capital Africa report, at least ten onshore and shallow-water oil blocks containing an estimated two billion barrels of oil equivalent are preparing for potential divestment.
The potential assets include blocks operated by Chevron, TotalEnergies, and NNPC’s exploration subsidiary NEPL, spread across the Niger Delta’s prolific terrain. Specific blocks identified include OMLs 49, 50, 51, 55, 64/66, 65, 86/88, 100, 118 (Agbara), and 140, collectively containing 937 million barrels of oil reserves and 6.4 trillion cubic feet of gas.
These divestments mark the third major phase of ownership change in Nigeria’s oil industry. Since 2020, indigenous and regionally focused E&P companies have made acquisitions worth over $7 billion in Nigeria, with firms such as Aradel Holdings, Seplat Energy, Heirs Holdings, and ND Western leading the charge. Post-acquisition, local ownership has actually reduced oil theft and vandalism, with transmission losses dropping materially compared to the previous decade when losses reached up to 90 percent at their peak.
Dangote, with its deep pockets and vertical integration strategy, is well-positioned to join this wave. The company has already signaled its intent to grow its upstream presence. David Bird, CEO of the refining business, declined to comment on whether Dangote is participating in Nigeria’s ongoing bid round, but the opportunity is vast.
That bid round, launched by the NUPRC in December 2025, offers 50 oil and gas blocks across onshore, shallow-water, frontier acreage, and deep offshore terrains. The government is targeting $10 billion in fresh investments and an additional 400,000 barrels per day in national production. The blocks comprise 15 onshore assets, 19 shallow-water blocks, 15 frontier acreage blocks, and one deep offshore block. For a company like Dangote, which already holds a 45 percent working interest in OMLs 71 and 72, acquiring additional licenses would be a natural next step.
Beyond the bid round, the refinery could also take advantage of the ongoing divestment wave to acquire producing assets that would deliver immediate cash flow and feedstock. Unlike the exploration-heavy bid round, acquiring mature producing fields from IOCs would give Dangote barrels that are already flowing, exactly what the refinery needs to fill its tanks.
The Renaissance Capital report notes that “indigenous and regionally focused E&Ps have made acquisitions worth over USD 7bn in Nigeria alone since 2020,” and that “post the acquisition of these onshore assets, local vandalism and theft have reduced materially”. This suggests that local operators, including potential Dangote acquisitions, can actually manage these assets more effectively than the IOCs they replace.
Even with aggressive expansion, however, Dangote’s upstream production is forecast to plateau at just 43,000 barrels of oil equivalent per day by 2036 from its current OMLs 71 and 72. That is still less than seven percent of the refinery’s 650,000 bpd capacity. To truly achieve self-sufficiency, Dangote would need to acquire multiple additional blocks, potentially several of the ten divesting assets and develop them aggressively.
The journey of Dangote’s upstream assets is a story of patience, acquisition, and finally, production. It began not on a drilling rig, but in the boardrooms of 2015.
That year, West African E&P (WAEP), a joint venture in which Dangote holds an 85 percent stake expended approximately $300 million to acquire a 45 percent working interest in OMLs 71 and 72 from Shell. The assets had first been discovered in 1966 and had produced at a peak of 21,000 barrels per day in 1999 before declining in 2003. The remaining interest in the licenses is held by the Nigerian National Petroleum Corporation (NNPC), while First E&P, WAEP’s minority stakeholder, operates the assets.
For nearly a decade, the assets lay relatively dormant. But the pressure on Dangote’s refining business, months of crude supply glitches and the painful reality of importing feedstock finally forced the company’s hand. In late 2024, Dangote announced it would commence production at its two Nigerian oil assets, after enduring months of crude supply shortages.
After delays, the Kalaekule field on OML 72 finally achieved start-up in December 2025. The current production of 4,500 bpd is being tested, with standard testing expected to be completed within three to four weeks. After that, large-scale pumping and fresh drilling campaigns will commence, using a rig that Dangote has already arranged. Production is projected to reach 15,000 bpd within a month, with the long-term target of up to 40,000 bpd from the two licenses.
The company is also investing in its own shipping presence, a fleet of tankers that would transport crude from the Niger Delta directly to the Lekki refinery, reducing logistics costs and improving supply reliability. Combined with WAEP’s indigenous production, Dangote-owned vessels could offer the refinery a “fully integrated” supply chain, as David Bird described it.
What this means is that the Dangote Refinery stands as a monument to African industrial ambition. At full capacity, it could transform Nigeria from a fuel-importing nation into a net exporter of refined products, saving billions in foreign exchange and stabilizing domestic fuel prices.
But that vision is being strangled by a paradox: Nigeria is Africa’s largest oil producer, yet its flagship refinery cannot get enough domestic crude. Until that paradox is resolved, either through rigorous enforcement of the DCSO, aggressive upstream expansion by Dangote, or both, the refinery will continue to burn dollars on imported feedstock while Nigerian crude flows to buyers overseas.
The first oil from OML 72 is a milestone worth celebrating. But for the Dangote Refinery to truly fulfill its promise, 4,500 barrels a day is not a solution. It is a reminder of how far there is still to go.